The Japanese yen was up against all of its major rivals on Tuesday, as political turmoil in France and the Netherlands are raising concerns that uncertainty will slow down the euro zone's efforts to push through with planned budget cuts. Riskier currencies were on the defensive and Asian stock markets were lower as risk appetite came under pressure.
The Australian dollar fell to a 2-week low against the dollar on Tuesday, hurt by an inflation report which showed consumer prices were lower than expected in the first quarter. The Aussie was half a percent lower against its major peers, as its headline inflation figure dropped sharply to 1.6 percent y/y versus a forecast for 2.2 percent. fell to 1.0247 extending its drop from yesterday, where it closed below its 200-day moving average by 1.0374. With today's CPI data, and also yesterday's downbeat PPI data, expectations for a rate cut in the next policy meeting by the Reserve Bank of Australia is now highly anticipated and some are even expecting further rate cuts were possible.
The euro pulled back some of the losses suffered yesterday against the greenback but failed to make much headway on increasing political uncertainty. fell to 1.3105 yesterday amid concern over the French election, the Dutch Prime minister's resignation and slumping euro zone PMIs. The pair is up slightly today, by 0.2 percent, but Moody's comments that the Netherlands is facing a "credit negative" event due to the collapse of its government kept gains in check. A key bond sale from the Netherlands is scheduled today, which will gauge the confidence of financial markets in one of the euro zone's most stable nations.